Table 4 reports the results of estimating equation (11). In column 1, we include all affiliates and find a positive and statistically significant point estimate, indicating that affiliates in countries receiving a BTT expanded their employment more than other affiliates in the same industry. Columns 2 and 3 show that this positive effect is entirely driven by affiliates in high-RID industries, where BTTs are most likely to resolve double taxation. The effect in low-RID industries in column 3 is statistically indistinguishable from 0 and is economically small. Columns 4 to 6 introduce the standard controls discussed in section II, along with controls for BTTs in sibling affiliate countries to control for potential spillovers across siblings. We define “Parent-Sibling BTTs” as the share of initial sibling affiliate employment covered by a BTT with the United States in year $t$ and “Affiliate-Sibling BTT” as the share of initial sibling affiliate employment covered by a BTT between country $c$ and the countries in which affiliate $a$ has siblings. In both cases, using the initial shares of employment observed for each firm avoids allowing endogenous shifts in the affiliate weights to affect these controls. These controls have minimal effects on the coefficients of interest. The coefficient estimate of 0.338 in column 5 indicates that in high-RID industries, receiving a BTT increased affiliate employment by 40.2%, on average.25

Table 4.

Foreign Affiliate-Level Analysis: The Effect of BTTs on Offshore Employment

Dependent Variable: Log Affiliate Employment—$ln(mat)$
(1)(2)(3)(4)(5)(6)
SampleAllHigh RIDLow RIDAllHigh RIDLow RID
BTT 0.232*** 0.461*** −0.022 0.132* 0.338*** −0.089
(0.066) (0.077) (0.086) (0.072) (0.083) (0.088)
$ln(GDPus+GDPd)$    7.062** 6.658* 7.331***
(3.129) (3.451) (2.800)
$ln(GDPus-GDPd)2$    0.480* 0.512* 0.416*
(0.264) (0.286) (0.244)
$ln(SkillDifference)$    −0.185* −0.173* −0.195**
(0.095) (0.102) (0.087)
$ln(TradeCosts)$    0.031 0.029 0.033
(0.034) (0.036) (0.032)
BIT    −0.548** −0.528* −0.566**
(0.258) (0.279) (0.240)
FTA    0.016 0.075 −0.05
(0.105) (0.099) (0.112)
Exchange Rate    −0.00002 −0.00003 −0.00001
(0.000) (0.000) (0.000)
Parent-Sibling BTTs    −0.044* −0.046** −0.044
(0.026) (0.021) (0.033)
Affiliate-Sibling BTTs    0.133* 0.173** 0.083
(0.075) (0.081) (0.090)
Affiliate FE YES YES YES YES YES YES
Industry-Year FE YES YES YES YES YES YES
$N$ 342,239 197,116 145,123 342,239 197,116 145,123
$R$-squared 0.0014 0.0047 0.0001 0.0131 0.015 0.0145
$F$-Statistic 12.47 35.58 0.06 7.31 24.31 4.12
Dependent Variable: Log Affiliate Employment—$ln(mat)$
(1)(2)(3)(4)(5)(6)
SampleAllHigh RIDLow RIDAllHigh RIDLow RID
BTT 0.232*** 0.461*** −0.022 0.132* 0.338*** −0.089
(0.066) (0.077) (0.086) (0.072) (0.083) (0.088)
$ln(GDPus+GDPd)$    7.062** 6.658* 7.331***
(3.129) (3.451) (2.800)
$ln(GDPus-GDPd)2$    0.480* 0.512* 0.416*
(0.264) (0.286) (0.244)
$ln(SkillDifference)$    −0.185* −0.173* −0.195**
(0.095) (0.102) (0.087)
$ln(TradeCosts)$    0.031 0.029 0.033
(0.034) (0.036) (0.032)
BIT    −0.548** −0.528* −0.566**
(0.258) (0.279) (0.240)
FTA    0.016 0.075 −0.05
(0.105) (0.099) (0.112)
Exchange Rate    −0.00002 −0.00003 −0.00001
(0.000) (0.000) (0.000)
Parent-Sibling BTTs    −0.044* −0.046** −0.044
(0.026) (0.021) (0.033)
Affiliate-Sibling BTTs    0.133* 0.173** 0.083
(0.075) (0.081) (0.090)
Affiliate FE YES YES YES YES YES YES
Industry-Year FE YES YES YES YES YES YES
$N$ 342,239 197,116 145,123 342,239 197,116 145,123
$R$-squared 0.0014 0.0047 0.0001 0.0131 0.015 0.0145
$F$-Statistic 12.47 35.58 0.06 7.31 24.31 4.12

Documents the effect of newly signed bilateral tax treaties (BTTs) on foreign affiliate employment. “High RID” and “Low RID” refer to firms within industries that exhibit ratios of total payments in royalties, interest, and dividends relative to total industry sales that are above and below the median sector (see appendix A.2 for details). Sample covers 1987 to 2007. Standard errors clustered by both affiliate country and year are in parentheses. Significant at $*$10%, **5%, and ***1%.

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